Did GOP Money Man Sheldon Adelson Violate Bribery Law?

July 16, 2012 at 12:00 AM EDT

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One of the largest Republican donors in the 2012 election, gambling magnate Sheldon Adelson, is now under investigation for violating the Foreign Corrupt Practices Act, an anti-bribery law. Ray Suarez discusses the charges against Adelson with ProPublica managing editor Stephen Engelberg.

TRANSCRIPT

JEFFREY BROWN: And to our second money and politics story, this focused on an investigation of a leading Republican donor.

Ray Suarez has the story.

RAY SUAREZ: You may not know him by name, but gambling magnate Sheldon Adelson is one of the largest Republican donors in the 2012 election.

Adelson and members of his family are reported to have given more than $20 million to GOP-leaning super PACs, including some backing Newt Gingrich during the primary. Now Adelson is donating to the Restore Our Future super PAC. That group supports Mitt Romney and collected $20 million in June, a record month for a super PAC.

A new investigation finds Adelson may have violated the Foreign Corrupt Practices Act by paying a Macau lawyer hundreds of thousands of dollars, all in a bid to get approval for his projects in Macau, a special administrative region in China. Billions in profits were on the line.

China bans casino gambling in the rest of the country. The story was filed by “Frontline,” ProPublica and the investigative reporting — investigative reporting program at the University of California.

Stephen Engelberg is the managing editor of ProPublica, who co-wrote the story, and joins me now.

Stephen, like investors anywhere, Sheldon Adelson wanted to expand his casino gambling empire in Macau. It is, after all, the largest gambling center in the world. What was holding him up?

And it wasn’t just expanding the empire. At the time of the events that we write about in 2008, Sheldon Adelson had made a huge bet on Macau. He was constructing billions of dollars worth of casinos and a mall and other things. And he had suddenly run short of money. The financing was in doubt.

And they needed to raise some money. And they looked to do that a couple of different ways. One was to sell off some luxury apartments that they had built there. For that, they needed permission of the authorities in Macau. And the other was to go and have an IPO, so a stock in their new subsidiary in Macau known as China Sands.

In both of those things, they needed some favorable rulings from local politicians. And they weren’t getting them. And it was at that moment that they hired a man named Leonel Alves as their outside counsel. Now, Alves is a lawyer, a very-well-plugged-in guy in Macau. He has got three different posts.

He’s an adviser to the executive who kind of rules Macau, kind of like Macau’s governor or president, you might call him. He’s a member of the Macau legislature, and he’s also a member of a committee within the mainland China that advises the ruling Communist Party on policy. So he is both a political figure and a lawyer.

And Adelson’s company hires him to help him with these — help with these problems. And he does so. He delivers.

RAY SUAREZ: Well, that’s where the story starts to get interesting.

But why is it a problem? An international investor finding himself blocked in a foreign country, finding himself in trouble lawyers up and pushes ahead, what’s wrong with that?

STEPHEN ENGELBERG: Well, since 1977, the United States has made it a crime to pay foreign officials to influence policy in their countries.

We had a lot of companies in the United States paying bribes. And so Congress said, we’re not going to have that. American companies are not going to do that overseas. And so they passed a law which makes it a crime to pay a government official, public official, politician, anybody of that sort to either retain or advance your business interests overseas.

Now, in doing that, you have to ask them, according to the Justice Department, to in essence do something corrupt — that’s the word they use — to go out and do something outside what you are supposed to do as an elected officeholder and sort of influence events.

And that is what the FBI and Justice Department are now looking at in the case of Leonel Alves, Macau and Mr. Adelson. Is that what happened?

RAY SUAREZ: So it’s his dual status, not only as outside counsel to Sheldon Adelson, but his officeholding inside Macau that might create problems for the Sands?

STEPHEN ENGELBERG: Exactly.

And, in fact, the leadership, the executives at the company were quite concerned about this. It kind of came to a head when Mr. Alves submitted a bill for some $700,000, roughly, according to e-mails that we have looked at. And the company’s general counsel and others said, this could be a violation of the law. We need to get away from this guy.

And according to the emails we have seen, Adelson was rather insistent that, A., this gentleman be paid his $700,000, and, B., that the relationship continues, which it does. to this day, Leonel Alves is an outside counsel the Las Vegas Sands subsidiary in Macau.

RAY SUAREZ: Did Adelson eventually get what he wanted in Macau?

STEPHEN ENGELBERG: Well, that’s interesting.

In the area of the apartment buildings, the thing they wanted to sell to raise money, they got permission to sell the buildings as a whole, but what they really wanted to do was sell the apartments one by one. They’re still fighting to get that. On the IPO, the big issue was, there was a ferry concession. The ferry from China delivers the gamblers right to the doorsteps of the casino. It’s very important that they control that concession.

A competing company had filed a lawsuit. And they were in court Macau, and they were winning. They won at the first level, they won at the second level, and they were by all accounts about to win at the final level when the chief executive of Macau stepped in and, by executive fiat, said, no, I’m giving the concession to the Sands. I’m not going to let this court case go forward. Victory to the Sands.

Now, remember that 10-member counsel that advises him, 10 members include one Mr. Leonel Alves, who was certainly in a position to help influence this decision. Now, the documents we have looked at don’t say what he did or didn’t do about that. He wouldn’t talk to us.

But he was clearly, you know, in a place where he was one of the most important people advising the gentleman who made this decision. And it doesn’t take a rocket scientist to imagine that that is something investigators are going to want to find out more about.

RAY SUAREZ: So you have seen internal communications that show that other Sands officials realized there may be some jeopardy here?

STEPHEN ENGELBERG: Yes, indeed, in particular, two gentlemen.

The general counsel of the company — remember, this a Fortune 500 company — a man named Gonzalez-Pita, became very concerned about this. He asked an outside law firm to take a look at what was going on here. That law firm and he as well both agreed that this was a potential violation of the Foreign Corrupt Practices Act and that Mr. Alves shouldn’t be working for the company, given his government post.

That was a recommendation ultimately that wasn’t heeded.

RAY SUAREZ: And, quickly, Stephen, before we go, where is this being investigated in the United States? Is there any one center of — or special prosecutor who looks at what may be infractions committed overseas?

STEPHEN ENGELBERG: Yes.

This case is being investigated by the Department of Justice and the Federal Bureau of Investigation. That would handle the criminal side of it. The Securities and Exchange Commission potentially could also be looking at civil violations of the law. But the criminal side of this is being handled by the Department of Justice.

And we are told by people familiar with that that this case is ongoing and expanding.

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